When Should I Claim Social Security? A South Jersey CFP®'s Guide

The Social Security claiming decision may be the single most consequential financial choice you make in retirement. Claim too early and you could lock in a permanently reduced benefit. Wait too long and you may leave significant income on the table. The “right” answer depends on your health, your spouse's situation, other income sources, and how New Jersey taxes Social Security income.

This guide walks through the key factors. It is educational in nature and is not a substitute for personalized financial planning advice.

Understanding Your Claiming Options

Social Security retirement benefits may be claimed anytime between age 62 and age 70. The amount you receive each month depends heavily on when you start.

Your Full Retirement Age (FRA)

Your Full Retirement Age (FRA) is the age at which you receive 100% of your calculated benefit. For anyone born in 1960 or later, FRA is 67. If you were born between 1943 and 1954, FRA is 66.

For every month you delay beyond FRA up to age 70, your benefit may grow by approximately 0.67% (8% per year). These are called delayed retirement credits.

Age 62: Claiming Early

Claiming at 62 could make sense in specific circumstances — poor health, immediate financial need, or a situation where a spouse has a much higher benefit (more on that below). But the trade-offs are real:

• Your benefit may be permanently reduced by up to 30% compared to waiting until FRA.
• If you continue working before FRA, Social Security could temporarily withhold some benefits based on the earnings test ($22,320 limit in 2024).
• Survivor benefits paid to a spouse could also be lower.

Many pre-retirees in South Jersey ask: “What if I need the money now?” That’s a legitimate reason to consider an earlier claim. The decision should weigh your current financial position alongside your long-term income needs.

Waiting Until 70: The Delayed Strategy

Delaying to age 70 maximizes your monthly check, which could be particularly valuable if you live a long life. The Social Security Administration estimates the average American reaching 62 today could live into their mid-to-late 80s.

Consider this simplified illustration: If your FRA benefit at 67 would be $2,000/month, claiming at 62 could reduce it to approximately $1,400/month, while waiting until 70 could grow it to roughly $2,480/month. Over a 20-year retirement, the difference can be substantial.

The challenge: you must fund living expenses from other sources (savings, pension, part-time work) during the delay years. This is where comprehensive retirement income planning becomes important.

Spousal Benefits: A Separate Calculation

If you are married, Social Security offers spousal benefits that may significantly affect your claiming strategy.

How Spousal Benefits Work

• A spouse may receive up to 50% of the higher-earning spouse’s FRA benefit.
• Spousal benefits are reduced if claimed before the receiving spouse’s own FRA.
• There is no bonus for delaying spousal benefits past FRA — unlike your own benefit, waiting until 70 does not increase a spousal benefit.

The “Survivor Benefit” Angle

When one spouse passes away, the surviving spouse may keep the higher of the two benefits. This gives higher-earning spouses a strong incentive to delay claiming, potentially to 70, to maximize the benefit that will carry forward for a surviving spouse.

Married couples often benefit most from a coordinated claiming strategy that accounts for both spouses’ benefits, ages, health, and other income.

How New Jersey Taxes Social Security Income

New Jersey has its own income tax rules for Social Security — separate from federal rules.

• NJ does not tax Social Security benefits for taxpayers with gross income at or below $100,000 (individuals) or $150,000 (couples filing jointly), as of current law.
• Above those thresholds, a portion of benefits may become subject to NJ income tax.
• At the federal level, up to 85% of Social Security benefits may be taxable depending on your “combined income” (adjusted gross income + nontaxable interest + half of Social Security benefits).

Tax laws change, so it is worth revisiting this calculation annually with a financial planner or tax advisor.

Other Factors Worth Considering

Health and Life Expectancy

Your personal health and family history of longevity are important inputs. A “break-even” analysis can help estimate the age at which delaying pays off — typically somewhere in the mid-to-late 70s when comparing claiming at 62 vs. 70.

Pension Income

If you receive a pension from an employer that did not withhold Social Security taxes, the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO) rules may reduce your Social Security benefit. This is relevant for some public sector employees in New Jersey.

Divorce

Divorced individuals may be eligible for Social Security benefits based on an ex-spouse’s record if the marriage lasted at least 10 years and they have not remarried.